Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, July 6, 2023

AI Summary. Using a genealogical database of 422,374 English people with rarer surnames, the authors find social status persists strongly even among distant relatives, with status correlations declining by a constant factor of 0.79 per step in the lineage across all status measures and eras studied. The authors argue this constancy suggests social interventions have modest effects.

Gregory Clark The Proceedings of the National Academy of Sciences
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Gregory Clark @PNASNews finds that social status in England was strongly correlated across generations between 1600 and 2022, consistent with a theory of genetic transmission of characteristics influencing status.

How strongly does social status persist across generations and distant relatives?

Core argument: Using a genealogical database of 422,374 people with rarer surnames in England, the paper finds status correlations decline by a constant factor of 0.79 with each step outward in a lineage, across different status measures and epochs from 1600 to 2022.

Using a large genealogical database of 422,374 people with rarer surnames in England the paper examines patterns of inheritance of social status in England. These correlations reveal four things. First status persists strongly across even very distant relatives, across all measures of status. Second the decline in status correlations with each step outward in the lineage is a constant 0.79, for different measures of status, and epochs from 1600 to 2022. Third of the correlations conform closely to those predicted by Ronald Fisher in 1918, for familial correlations in the presence of strong assortment in mating. In particular, the correlation in mating in the genetics underlying social outcomes [must] be 0.57 to generate the persistence rate of 0.79. Since these are observational data, there is no proof that additive genetic transmission causes social status. [Only] that whatever social processes are producing the observed outcomes have a form of transmission which mimics that of additive genetic effects, in the presence of the important social institution of strong assortative mating. [Fourth,] the constancy of status persistence across the interval 1600 to 2022 does suggest social interventions have surprisingly modest effects.”

Takeaways by Macro Roundup® AI

  1. Using a genealogical database of 422,374 people with rarer surnames in England, the paper finds status correlations decline by a constant factor of 0.79 with each step outward in a lineage, across different status measures and epochs from 1600 to 2022.
  2. The observed correlations conform closely to those Ronald Fisher predicted in 1918 for familial correlations under strong assortative mating, requiring a mating correlation of 0.57 in the genetics underlying social outcomes to generate the 0.79 persistence rate.
  3. Because the data are observational, the paper claims no proof that additive genetic transmission causes social status, only that the social processes involved mimic additive genetic transmission under strong assortative mating.

AI Summary. United Nations data show the U.S. remained the top destination for foreign direct investment even as inflows fell to $285bn from $388bn, driven mainly by a drop in foreign purchases of American companies. China recorded its highest-ever inflow at $189bn, a 5% increase, much of it from European businesses.

Paul Hannon Wall Street Journal
Date Posted:

Foreign direct investment in the US fell by 27% in 2022 to $285 billion, but the United States remains the largest destination of foreign direct investment.

Does the US remain the top foreign investment destination despite falling inflows?

Core argument: Foreign direct investment into the U.S. fell to $285 billion in 2022 from $388 billion in 2021, mainly due to a sharp drop in foreign purchases of American companies, according to United Nations data.

The U.S. was the top destination for businesses looking to expand internationally last year but the inflow of capital fell as companies around the world cut foreign investment amid rising uncertainty and borrowing costs. Foreign investment in the U.S. fell to $285 billion in 2022 from $388 billion in 2021, mainly due to a sharp fall in foreign purchases of American companies, according to United Nations data. While still behind the U.S., China registered its highest-ever inflow at $189 billion, an increase of 5%. Much of that increase came from European businesses.

Takeaways by Macro Roundup® AI

  1. Foreign direct investment into the U.S. fell to $285 billion in 2022 from $388 billion in 2021, mainly due to a sharp drop in foreign purchases of American companies, according to United Nations data.
  2. The U.S. remained the top destination for businesses expanding internationally in 2022, even as companies worldwide cut foreign investment amid rising uncertainty and borrowing costs.
  3. China recorded its highest-ever foreign investment inflow at $189 billion in 2022, an increase of 5% driven largely by European businesses, though still behind the U.S.

Related Articles:

  • Financial Fragmentation — Cross-border lending and investment involving the U.S., China, and the euro area have contracted, with the gross value of such transactions falling from about $7.9tn to roughly $2.8tn in a single year. Relative to the three economies' combined output, international financial transaction volumes are smaller than at any point other than the trough of the financial crisis.

AI Summary. US investors financed 3,011 startup funding deals in a quarter, about a third fewer than a year earlier, and spent $39.8bn, down by nearly half. The steepest decline came in angel and seed deals, an early-stage category considered critical to the venture ecosystem, where the number of deals halved.

Sarah McBride Bloomberg
Date Posted:

The number VC funded startup deals in Q2 2023 was down a third vs. Q2 2022, with total deal value down nearly half. @markets

Is US venture funding falling most sharply at the earliest stages?

Core argument: US venture capital investors spent $39.8 billion across 3,011 startup funding deals last quarter, with dollars down by nearly half and deal count down about a third from a year earlier, according to PitchBook.

In the US, investors financed 3,011 startup funding deals last quarter, about a third fewer than a year ago. And they spent less cash: $39.8 billion, down by nearly half from the same period last year. Take out the more than $6.5 billion investors spent on payments company Stripe, and the total looks even worse, said PitchBook analyst Kyle Stanford. The biggest drop came in angel or seed deals. In that category, there were half as many funding deals as there were a year earlier. Those early funding rounds — when young companies are either nurtured or starved — are generally considered to be critical to the health of the venture ecosystem.

Takeaways by Macro Roundup® AI

  1. US venture capital investors spent $39.8 billion across 3,011 startup funding deals last quarter, with dollars down by nearly half and deal count down about a third from a year earlier, according to PitchBook.
  2. Angel and seed deals posted the biggest drop, with half as many funding deals as a year earlier, a category generally considered critical to the health of the venture ecosystem.
  3. Excluding the more than $6.5 billion investors put into payments company Stripe, the quarterly US venture total looks even worse, said PitchBook analyst Kyle Stanford.

AI Summary. A boom in US domestic chipmaking construction has raised demand for semiconductor manufacturing equipment that cannot be met domestically, pushing US equipment imports near an all-time high, with Japan, the European Union, and Singapore as the major sources. This helps explain why the market for semiconductor equipment has not contracted alongside the market for chips.

Joseph Politano Apricitas Economics
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.@JosephPolitano notes a surge in US capital investment in chip-making equipment: in Q1 2023, special industry machinery investment (mostly semiconductor equipment) was 50% higher in real terms than the 2019 peak.

Is the US chipmaking boom driving record imports of semiconductor equipment?

Core argument: US semiconductor equipment imports have run near an all-time high in recent months, with Japan, the EU, and Singapore the major sources, as domestic chipmaking construction outpaces what US suppliers can meet.

The boom in domestic US chipmaking construction has been coupled with rising demand for semiconductor equipment that can’t be met domestically. The pace of US semiconductor equipment imports over the last few months has been near an all-time high, with Japan, the EU, and Singapore being the major sources. This is part of the reason why the market for semiconductor equipment hasn’t contracted alongside the market for chips themselves. Supercharged domestic investment is perhaps the US’s greatest asset in the current trade war—buying up scarce chipmaking equipment gives America leverage to encourage compliance among its would-be customers and trade partners.

Takeaways by Macro Roundup® AI

  1. US semiconductor equipment imports have run near an all-time high in recent months, with Japan, the EU, and Singapore the major sources, as domestic chipmaking construction outpaces what US suppliers can meet.
  2. The market for semiconductor equipment has not contracted alongside the market for chips themselves, partly because of US import demand tied to the domestic chipmaking construction boom.
  3. Supercharged domestic investment is arguably the United States' greatest asset in the semiconductor trade war, as buying up scarce chipmaking equipment gives America leverage to encourage compliance among would-be customers and trade partners.

Related Articles:

  • Making Manufacturing Great Again — US manufacturing construction spending has more than doubled over the past year and risen as a share of gross domestic product, a surge attributed to two laws: the Inflation Reduction Act, whose core is green energy subsidies, and the CHIPS Act, which promotes domestic semiconductor production.
  • TSMC To Send Hundreds More Workers To Speed U.S. Plant Construction — Chipmaker TSMC and its suppliers are in talks with the U.S. government on non-immigrant visas to dispatch more than 500 experienced workers to speed construction of its U.S. chip plants, according to chip supply chain executives. Executives said too few U.S. workers have hands-on experience building semiconductor facilities, causing installation delays.

AI Summary. Catalist data show a nationwide shift among Latino voters toward Republicans, with the Democratic margin among this group falling 18 points; Cubans moved 26 points, Puerto Ricans 18, Dominicans 16 and Mexicans 12. Latino men gave Trump 44% of their two-party vote.

Ruy Teixeira Washington Post
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Ruy Teixeira notes that Democrats’ margin with Latino voters dropped by 18pp in ‘20 vs. ‘16, with Latino men giving President Trump 44% of their 2020 two-party vote.

Ruy Teixeira notes that Democrats’ margin with Latino voters dropped by 18pp in ‘20 vs. ‘16, with Latino men giving...

Are Hispanic voters shifting toward Republicans across national origin groups?

Core argument: Catalist data show the Democrats' margin among Latino voters fell 18 points in 2020 relative to 2016, a nationwide shift.

Catalist data confirm a nationwide shift among Latinos in 2020. The Democrats’ overall margin among this group dropped by 18 points relative to 2016. Cubans had the largest shift of 26 points, but Puerto Ricans moved by 18 points to Trump, Dominicans by 16 points and Mexicans by 12 points. An overall weak spot for Democrats was among Latino men who gave Trump a shocking 44 percent of their two-party vote in 2020. And in a recent Washington Post-ABC poll, Hispanics preferred the way Trump handled the economy when he was in office to Biden’s performance so far by 55 to 36 percent.

Takeaways by Macro Roundup® AI

  1. Catalist data show the Democrats' margin among Latino voters fell 18 points in 2020 relative to 2016, a nationwide shift.
  2. Among Latino subgroups, Cubans shifted most toward Trump at 26 points, followed by Puerto Ricans at 18 points, Dominicans at 16 points and Mexicans at 12 points.
  3. Latino men gave Trump 44 percent of their two-party vote in 2020, and Hispanics in a Washington Post-ABC poll preferred Trump's handling of the economy to Biden's by 55 to 36 percent.

Related Articles:

  • What Happened In 2022 — Young voters aged 18–29 backed Democrats by 65%, and in heavily contested states turnout among those eligible in two consecutive elections rose 6%. Women voters, for whom abortion rights were often the top issue, favored Democrats in close races, while "MAGA" Republicans underperformed in contested Senate, gubernatorial, and congressional contests.
  • Republicans Really Are the Party of the Working Class — Republicans receive more votes from working-class (non-college) Americans than Democrats, carrying the nationwide working-class House vote by 13 points and the working-class presidential vote by 4 points. Modeled estimates from the States of Change project indicate the Republican presidential candidate won the working-class vote in 35 of 50 states.

AI Summary. The number of white Americans without college degrees, a group that backed Donald Trump by 67% to 32%, has fallen by 2.1m, while the number of white college graduates, a constituency that narrowly favored Joe Biden, has grown by 13.3m. These demographic shifts work against Republican candidates.

Thomas Edsall New York Times
Date Posted:

.@Edsall notes that former President Trump’s core constituency of whites without college degrees fell by 2.1M from 2016-22. During that same period, the number of white college graduates increased by 13.2M.

.@Edsall notes that former President Trump’s core constituency of whites without college degrees fell by 2.1M from 2016-22. ...

Do shifts in white voters' education levels disadvantage Republicans?

Core argument: The number of white Americans without college degrees, the core of Donald Trump's support, fell by 2.1 million from 2016 to 2022, while white college graduates, an increasingly Democratic constituency, grew by 13.3 million.

One of the most significant developments in the run-up to the 2024 presidential election has emerged largely under the radar. From 2016 to 2022, the number of white people without college degrees — the core of Donald Trump’s support — has fallen by 2.1 million. Over the same period, the number of white people who have graduated from college — an increasingly Democratic constituency — has grown by 13.3 million. These trends do not bode well for the prospects of Republican candidates, especially Trump. President Biden won white people with college degrees in 2020, 51 to 48 percent, but Trump won by a landslide, 67 to 32 percent, among white people without degrees, according to network exit polls.

Takeaways by Macro Roundup® AI

  1. The number of white Americans without college degrees, the core of Donald Trump's support, fell by 2.1 million from 2016 to 2022, while white college graduates, an increasingly Democratic constituency, grew by 13.3 million.
  2. Network exit polls show Trump won white voters without degrees 67 to 32 percent in 2020, while Joe Biden carried white college graduates 51 to 48 percent.
  3. The shrinking non-college white population and the expanding college-educated white population do not bode well for Republican candidates, especially Trump, in the 2024 presidential election.

Related Articles:

  • The Road To A Political Realignment In American Politics — College-educated voters are now more likely to identify as Democrats while those without degrees back Republicans, with educational attainment increasingly correlated with views on abortion, LGBTQ+ rights, and religion's relationship to government. This sorting leaves most states politically uncompetitive, with eight states near the national average in education levels holding 97 electoral votes in play.
  • What Happened In 2022 — Young voters aged 18–29 backed Democrats by 65%, and in heavily contested states turnout among those eligible in two consecutive elections rose 6%. Women voters, for whom abortion rights were often the top issue, favored Democrats in close races, while "MAGA" Republicans underperformed in contested Senate, gubernatorial, and congressional contests.

Friday, July 7, 2023

AI Summary. The Congressional Budget Office projects federal spending will reach 29.1% of GDP over three decades, with net interest on the national debt rising from 1.9% of GDP to 6.7%, or $5.4tn. Under that projection, interest becomes the largest single federal budget line item, surpassing Social Security, Medicare, and Medicaid.

CRFB Staff Committee for a Responsible Federal Budget
Date Posted:

.@BudgetHawks highlights that in the latest @USCBO forecast Federal interest expenses will exceed defense spending by 2027 and nondefense discretionary by 2029.

Will interest payments become the largest federal budget item?

Core argument: CBO's long-term baseline projects net interest payments will rise from 1.9% of GDP in FY 2022 to a record 3.2% by 2030 and 6.7% by 2053, more than doubling as a share of the economy.

According to the Congressional Budget Office’s (CBO) long-term baseline, federal spending as a percentage of GDP will grow to 29.1% over the next three decades. Driving a large part of that growth is spending on interest payments to service the national debt. Net interest payments hit a nominal dollar record of $475B Fiscal Year (FY) 2022 and will nearly triple by FY 2033 to $1.4T, growing to $2.7T in 2043 and $5.4T 2053. As a share of the economy, net interest will rise from 1.9% of GDP in FY 2022 to hit a record 3.2% by 2030 and more than double to 6.7% by 2053. By 2051, spending on interest will be the single largest line item in the federal budget, surpassing Social Security, Medicare, Medicaid, and all other mandatory and discretionary spending programs.

Takeaways by Macro Roundup® AI

  1. CBO's long-term baseline projects net interest payments will rise from 1.9% of GDP in FY 2022 to a record 3.2% by 2030 and 6.7% by 2053, more than doubling as a share of the economy.
  2. Net interest hit a nominal record of $475 billion in FY 2022, and CBO projects it will nearly triple to $1.4 trillion by FY 2033, then reach $2.7 trillion in 2043 and $5.4 trillion in 2053.
  3. CBO projects interest costs will become the single largest federal budget line item by 2051, surpassing Social Security, Medicare, Medicaid, and all other mandatory and discretionary programs, with federal spending reaching 29.1% of GDP over three decades.

Related Articles:

  • The 2023 Long-Term Budget Outlook — The Congressional Budget Office projects the federal deficit falls from 5.8% of gross domestic product to 5.0% before rising every year to 10% of GDP over three decades, a level exceeded only during World War II and the pandemic. Federal debt held by the public is projected to reach 181% of GDP.
  • American Gothic — US tax increases since 1950 of 2% of GDP or more occurred when overall tax receipts were a much smaller share of GDP than today. Restoring the ratio of entitlement to non-defense discretionary spending to its earlier level of 2.2x would require tax increases larger than those historical precedents.

AI Summary. U.S. shale drilling and fracking costs have fallen 36% since 2014 even as recovered oil volumes have risen, according to J.P. Morgan. One major producer can now earn as much from $42-a-barrel oil as it once did at $86, while Saudi Arabia's budget is estimated to require $81 a barrel.

Bob Henderson Wall Street Journal
Date Posted:

American crude oil production will hit a record in 2023, driven by production improvements that have lowered the cost of drilling and fracking by 36% since 2014, according to @jpmorgan estimates.

Have falling U.S. shale costs weakened OPEC's pricing power?

Core argument: J.P. Morgan estimates U.S. shale drilling and fracking costs have fallen 36% since 2014 even as recovered oil volumes have risen.

Production improvements since 2014 have pushed down the cost of drilling and fracking in the U.S. shale patch by 36%, according to J.P. Morgan, even as recovered oil volumes have increased. A major producer, EOG Resources, said it bored a well over 5 miles deep and nearly 3 miles long in South Texas early this year—a record length for the company. The increased efficiency means EOG can earn as much from oil priced at $42 a barrel today as it would have from oil trading at $86 nine years ago. People familiar with Saudi oil policy have said the government’s budget requires an estimated $81 a barrel. Brent crude is trading around $76 a barrel, down 13% from the start of the year.

Takeaways by Macro Roundup® AI

  1. J.P. Morgan estimates U.S. shale drilling and fracking costs have fallen 36% since 2014 even as recovered oil volumes have risen.
  2. EOG Resources can earn as much from oil priced at $42 a barrel as it would have from $86 oil nine years ago, and it bored a company-record well over 5 miles deep and nearly 3 miles long in South Texas.
  3. Brent crude trades around $76 a barrel, down 13% from the start of the year and below the estimated $81 a barrel that people familiar with Saudi oil policy say the government's budget requires.

Related Articles:

  • Portfolio Nuclear — The US is in its fifth year of net energy independence, with domestic oil and gas production at all-time highs across four consecutive administrations. Wind and solar now supply 15% of the grid, allowing more coal and liquefied natural gas to be exported.
  • Energy and the Presidents — US coal production fell from about 775m short tons to 535m short tons and coal consumption fell over 33%, from roughly 717m to 477m short tons, despite expectations of support for the industry. No major federal legislation has curtailed US oil and gas output, both of which have reached all-time highs.

AI Summary. In the US, unemployment is roughly equal for the native-born and the foreign-born, at about 5.5%, and Black and white employment rates are close to even. In France, unemployment is 7% for the native-born but 12% for immigrants and over 17% for recent arrivals.

John Burn-Murdoch Financial Times
Date Posted:

.@jburnmurdoch notes that immigrants in France significantly underperform native-born citizens; unemployment rates for recent immigrants are significantly higher than in the US.

Do immigrants face wider employment gaps in France than in America?

Core argument: In France, unemployment stands at 7% for those born in the country versus 12% for immigrants, rising above 17% among those who arrived within the past ten years.

In 2021, US unemployment was 5.5% for those born in the country, and 5.6% for those born overseas. Black and white employment rates are now neck and neck. In France, unemployment is 7% among those born in the country, but 12% for immigrants, rising past 17% among those who arrived in the last ten years. Comparisons with Britain, whose demographics and colonial history perhaps make for a fairer benchmark, are similarly damning.

Takeaways by Macro Roundup® AI

  1. In France, unemployment stands at 7% for those born in the country versus 12% for immigrants, rising above 17% among those who arrived within the past ten years.
  2. US unemployment in 2021 was 5.5% for the native-born and 5.6% for the foreign-born, and Black and white employment rates are now neck and neck.
  3. Comparisons between France and Britain, whose demographics and colonial history arguably make for a fairer benchmark, are similarly damning for France.

Related Articles:

  • From Strengh To Strengh — The US produced $25.5tn in GDP, about 25% of the world total—roughly its 1990 share—while China's share stands at 18%; the US share of the G7's nominal GDP rose from 40% in 1990 to 58%. Income per person is now about 30% above western Europe and 54% above Japan, adjusted for purchasing power.
  • France Has Poor Income Mobility Compared To US, Study Shows — France's statistics agency finds a 71% correlation between individuals' positions on the national income scale over a roughly 15-year span, with the richest and poorest groups least likely to change bracket. The authors say this inertia is greater than in the US, where studies have shown a higher probability of moving up or down.

AI Summary. Credit expansions disproportionately channel credit to non-tradable sector firms and households, and the authors find that the sectoral allocation of credit predicts future GDP paths and the likelihood of systemic banking crises. Credit growth to non-tradable industries predicts boom-bust output patterns and elevated financial fragility, while credit to tradable industries is associated with higher future productivity growth.

Karsten Müller and Emil Verner National Bureau of Economic Research
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.@KarstenMueIIer and @EmilVerner find that credit growth to non-tradable industries like real estate is predictive of a boom-bust output pattern and financial fragility, while credit to the tradable sector is associated with productivity growth.

Does the sectoral allocation of credit predict output and banking crises?

Core argument: Across a sample of 59 systemic banking crises, non-tradable sector credit expands more than twice as rapidly relative to GDP as tradable sector credit, surpassing household debt growth in the three years immediately before crises.

Credit expansions lead to disproportionate credit growth toward non-tradable sector firms and households. This pattern is in line with theories in which these sectors are more sensitive to relaxations in financing conditions and to feedbacks through collateral values and domestic demand. The sectoral allocation of credit, in turn, has considerable predictive power for the future path of GDP and the likelihood of systemic banking crises. Credit growth to non-tradable industries predicts a boom-bust pattern in output and elevated financial fragility. Credit to the tradable sector, on the other hand, is less prone to large booms and is associated with higher future productivity growth. Our evidence suggests that previous work, which could not differentiate between different types of corporate credit, has missed an important margin of heterogeneity. Figure 7 plots the average yearly change in sectoral credit-to- GDP for five years before and after a systemic banking crisis, relative to non-crisis times. The sample includes 59 crises. Non-tradable sector credit expands more than twice as rapidly relative to GDP as tradable sector credit, surpassing the growth of household debt in the three years immediately before crises.

Takeaways by Macro Roundup® AI

  1. Across a sample of 59 systemic banking crises, non-tradable sector credit expands more than twice as rapidly relative to GDP as tradable sector credit, surpassing household debt growth in the three years immediately before crises.
  2. Credit growth to non-tradable industries predicts a boom-bust pattern in output and elevated financial fragility, while credit to the tradable sector is less prone to large booms and is associated with higher future productivity growth.
  3. The sectoral allocation of credit has considerable predictive power for the future path of GDP and the likelihood of systemic banking crises, a margin of heterogeneity missed by earlier work that could not differentiate types of corporate credit.

AI Summary. Because many immigrants send remittances home or plan to return, part of their spending occurs in their origin country rather than where they work, so local prices apply to only part of their budget. The authors argue this makes immigrants less deterred by high local costs, concentrating them in expensive cities.

Joan Monras Federal Reserve Bank of San Francisco
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.@JoanMonrasEcon argues that immigrants cluster in cities with higher wages to support remittances to family members in their native countries, and are deterred less by higher living costs than US-born workers.

Why do immigrants concentrate in the most expensive cities?

Core argument: Because a large share of immigrants send remittances home or plan to return to their birthplace, a substantial part of their spending occurs in their origin country rather than the city where they work.

A large share of immigrants keeps ties with their origin countries. Many send money, known as remittances, to family members in those countries, while others plan to eventually return to their birthplace. In either case, this means that a substantial part of immigrants’ spending, now or in the future, takes place in their origin country rather than in the city where they currently work. Hence, for immigrants, the local prices in the city where they work only matter for the fraction of their total budget spent there. This means, that, relative to native-born workers, immigrants are equally attracted to high wages in select cities but less deterred by high local prices—particularly housing. This simple mechanism can explain why immigrants concentrate so much in a small number of select cities, and why these cities tend to have the highest costs of living.

Takeaways by Macro Roundup® AI

  1. Because a large share of immigrants send remittances home or plan to return to their birthplace, a substantial part of their spending occurs in their origin country rather than the city where they work.
  2. Immigrants are as attracted to high wages in select cities as native-born workers but less deterred by high local prices, particularly housing, since local prices apply only to the fraction of their budget spent locally.
  3. This spending mechanism can explain why immigrants concentrate in a small number of select cities and why those cities tend to have the highest costs of living.

AI Summary. United Nations data show net emigration from China has risen from a low of about 125,000 a year to more than 300,000. Private data on individuals with over $1m in assets show a similar pattern, with net outflows of the wealthy climbing from around 9,000 a year to over 15,000.

Nathaniel Taplin Wall Street Journal
Date Posted:

Net emigration from China in 2022 was 300,000 up from a low of 125,000 in 2012 during China’s post-crisis period of growth.

Is emigration from China rising, including among the wealthy?

Core argument: Net emigration from China fell to as low as 125,000 in 2012 per U.N. data, rebounded to nearly 300,000 by 2018, and the U.N. forecast puts 2022 net emigration above 300,000, after about 200,000 in 2021.

Net emigration from China, which had fallen as low as 125,000 in 2012 according to U.N. data, had rebounded to nearly 300,000 by 2018. The latest U.N. forecast puts net emigration in 2022 at over 300,000 again, after a net drain of about 200,000 in 2021. Strikingly, the U.N. data actually lines up surprisingly well with data from private sources looking at a more specific demographic—the wealthy. Data collated by South Africa-based New World Wealth and Henley & Partners, a London-based investment migration consulting firm, show a similar pattern. Net outflows of high net-worth individuals (with more than $1 million in assets) from China were steady at around 9,000 a year for most of the early 2010s. But in the late 2010s, that number started rocketing up: In 2017, net emigration by the wealthy was over 11,000 individuals, and by 2019 it was more than 15,000. Henley estimate 13,500 wealthy individuals will, on net, leave China this year, following a 10,800 person net drain in 2022.

Takeaways by Macro Roundup® AI

  1. Net emigration from China fell to as low as 125,000 in 2012 per U.N. data, rebounded to nearly 300,000 by 2018, and the U.N. forecast puts 2022 net emigration above 300,000, after about 200,000 in 2021.
  2. Net outflows of high net-worth individuals holding more than $1 million in assets from China held near 9,000 a year through most of the early 2010s, then rose above 11,000 in 2017 and more than 15,000 by 2019, per New World Wealth and Henley & Partners data.
  3. Henley & Partners estimate 13,500 wealthy individuals will leave China on net this year, following a net drain of 10,800 in 2022.

Related Articles:

  • Singapore Asks Banks to Keep Quiet on Wealth Inflows During China Boom — Singapore's central bank has asked major banks to minimize public discussion of the origins of large inflows of money into the city-state, much of it from wealthy Chinese, an issue that has become politically sensitive domestically. Lawyers and industry groups estimate Singapore hosts roughly 1,500 family offices, a large share of them Chinese.
  • U.S. Bound Migrants Surge at Darien Jungle Crossing in Panama — Panamanian immigration data show 49,291 migrants crossed the Darien Gap rainforest between Colombia and Panama en route to the U.S. over a two-month span, more than a fivefold increase from 8,964 in the same period a year earlier. Chinese nationals accounted for about 2,200 of those crossings, up from 71.